UK procurement reforms: tender strategies, Public Interest Test & social value objectives explained

In March 2026, the UK Government announced a significant package of public procurement reforms aimed at strengthening national security, improving the resilience of domestic supply chains and ensuring that public spending delivers wider economic and social benefits. 

This announcement follows last year’s public consultation on making changes to the Procurement Act 2023 (the Government’s response to that consultation was also issued in March), which itself followed on from the introduction of the Procurement Act in February 2025. 

While many of the measures are aimed at central government departments and their arms‑length bodies, their influence is likely to be felt more widely across the UK public sector and the supplier market — and over time, shaping procurement practices across other contracting authorities.

Here, Paddy Fearnon, Laura Keane and Michael Winder outline the key reforms and what contracting authorities and suppliers should be doing to prepare.

National security & UK supply chain resilience

The Government has confirmed that shipbuilding, steel, artificial intelligence and energy infrastructure will be recognised as sectors critical to national security. New guidance will be published on the use of national security exemptions when procuring in these areas — enabling central government departments to prioritise contracts for British businesses to protect the UK’s security of supply in these critical sectors.

The guidance is intended to help central government bodies secure domestic supply chains where necessary to protect national security. This reflects growing concerns about over‑reliance on overseas suppliers and the global supply‑chain disruption caused by recent geopolitical and economic events.

Looking ahead, this may place greater emphasis on contracting authorities’ engagement with overseas suppliers, while ensuring that national security considerations are at the forefront of supply-chain decision making. 

So, as part of their tender strategies, suppliers operating in or alongside these industries may wish to demonstrate how their operations support UK capability and mitigate supply risk.

The Public Interest Test & its impact on outsourcing 

The Government also intends for a new Public Interest Test to be introduced for service contracts valued at over £1m. This test will require central government departments to assess whether services could be delivered more effectively in‑house. They may also look to re-assess longstanding outsourced agreements, particularly where contracts are approaching expiry or current delivery models no longer align with public interest or value for money considerations.

This signals a shift away from outsourcing by default and reflects the growing need for greater transparency and accountability in sourcing decisions. 

In future, contracting authorities may need to explain why outsourcing offers better outcomes than in‑house delivery and ensure that assessments are applied consistently and are adequately documented.

For suppliers, the change may alter how tenders are delivered and assessed. They may need to demonstrate not only how they’ll deliver a service but why outsourcing offers advantages such as specialist expertise, value for money, flexibility or innovation.

Delivering measurable social value

Central government departments will be required to set specific social value objectives for all contracts valued at over £5m and report annually on progress. 

This will cover over 90% of central government contracts by value — significantly increasing transparency and accountability around the delivery of social value outcomes.

Social value commitments made by suppliers at the tender stage are increasingly likely to be monitored and assessed throughout contract delivery. There’s a growing expectation that contracting authorities will give greater consideration to how social value outcomes are defined, measured and enforced across the contract lifecycle, with suppliers subject to closer scrutiny of the social value commitments that they made at tender stage.

New transparency requirements for UK steel

The Government has also announced new transparency requirements around the use of UK steel in public contracts. At contract-award stage, central government departments will be expected to confirm whether UK‑sourced steel is being used or provide a robust justification where steel is sourced from overseas.

Looking ahead, these requirements may necessitate earlier engagement between authorities and suppliers to ensure that sourcing decisions can be evidenced at the appropriate stage. 

Where overseas steel is proposed, contracting authorities should expect to justify decisions by reference to availability, capacity and project risk.

Suppliers relying on global or mixed supply chains should ensure that traceability information and supporting evidence can be provided at both tender and award stage (where necessary).

AI in procurement & emerging governance risks

The reforms also include the introduction of AI-enabled tools designed to streamline procurement processes. These are intended to help generate and quality‑assure commercial documentation, simplify standard terms and reduce the administrative burden. This should particularly benefit SMEs, who may be more limited in resources.

Yet as with any implementation of new technology, this will also raise governance considerations. Central government departments must ensure appropriate oversight, auditability and accountability where AI-enabled tools influence tender evaluation or contractual documentation.

Looking ahead

These public procurement reforms reinforce a clear policy direction, with procurement increasingly used to support domestic supply chains, social value and long‑term economic outcomes.

Further guidance to support practitioners and suppliers on the implementation and enforcement of these measures is expected later this year. 

In the meantime, contracting authorities and suppliers that engage early, review governance arrangements and adapt their tender strategies will be best-placed to manage risk and take advantage of emerging opportunities — particularly for SMEs with strong UK‑based capabilities.

It should be noted that while the majority of the guidance is directed at central government, the wider public sector will typically end up reflecting what central government does anyway (to one degree or another). 

Talk to us

Our ‘Top Tier’ procurement lawyers advise both contracting authorities and suppliers on public procurement, the Procurement Act 2023 and procurement governance.

Book a meeting with us today to discuss how these changes affect you, as well as and how best to prepare for upcoming guidance.

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